Because of that, the rally likely is to run out of steam as low volume eventually comes back to the bite the market, he said.

"It feels to me we're in a trader's market and not an investor's market," Niederauer said in a live interview from the exchange floor.

Markets are likely to near their March lows after an upswing that has sent the major indexes more than 20 percent higher, he said.

"The volume in March hasn't convinced me that it's the kind of volume that you need to see to believe it was the real beginning of a turnaround," he said. "Instincts tell me we're going to retrace one more time and the rally I believe is the summer rally."

Long-term retail investors--with a three- to five-year time line--remain concerned that the rally is merely a bear-market bounce, and uncertainties in corporate health and the economy still pose dangers, he added.

"I think the real-money investors are still watching because I don't think the fundamentals are in place yet where the people feel like they can do good fundamental homework," Niederauer said. "So the feeling I've got talking to a lot of investors is they're still watching and waiting."

Niederauer called the current rally "too much, too soon," and said investor confidence remains fragile.

"There's no doubt that a lot of the ... equity investing attitudes have been damaged and I think it remains to be seen whether that damage is irreparable," he said. "They're certainly not just going to come running back."